During the World Trade Organisation (WTO) Uruguay Round multilateral negotiations (1986-1994), the European Union signed an agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Pharmaceutical patents are among the intellectual property rights the agreement is intended to protect.

ACT

Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994).

The principles are those of national treatment and most-favoured-nation treatment. Thus, members of the World Trade Organisation (WTO) must accord the nationals of other members' treatment no less favourable than that they accord to their own nationals. Moreover, any advantage granted by a member to nationals of another member must be accorded immediately and unconditionally to the nationals of all other members even if this treatment is more favourable than that accorded to its own nationals.

The Agreement aims to ensure that adequate rules on the protection of intellectual property are applied in all member countries, on the basis of the basic obligations laid down by the WIPO (World Intellectual Property Organisation) in the various conventions on intellectual property rights, particularly the Paris Convention for the Protection of Industrial Property. Numerous new rules or stricter rules are introduced in fields not covered by the existing conventions or where the existing conventions are inadequate.

The agreement covers a vast range of topics, from copyright and trademarks to layout-designs of integrated circuits and trade secrets. Patents protecting pharmaceutical products and other products are just one part of this agreement.

INTELLECTUAL PROPERTY RIGHTS FOR PHARMACEUTICAL PATENTS

Patents provide the patent owner with the legal means to prevent others from making, using, or selling the new invention for a limited period of time, subject to a number of exceptions. Patents do not constitute marketing authorisations.

The TRIPS Agreement stipulates that it must be possible for all inventions to be protected by a patent for 20 years, whether for a product (such as a medicine) or a process (a method of producing an ingredient for a medicine). To qualify for a patent, an invention has to be "new", it must be an "inventive step" and it must have "industrial applicability". In addition, patented inventions have to be disclosed; enabling others to study the invention even while it is patent protected.

Governments can refuse to grant patents for the three reasons set out below:

for inventions whose commercial exploitation needs to be prevented to protect human, animal or plant life or health;

for diagnostic, therapeutic and surgical methods for treating humans or animals;

for certain plant and animal inventions.

Governments also play a supervisory role and can act to prevent patent owners from abusing these rights (anti-competitive practices) or hampering the transfer of technology.

The TRIPS Agreement makes provision for limited exceptions to patent rights. These exceptions must not "unreasonably" conflict with the "normal" exploitation of the patent. These exceptions are used in very different instances and in particular:

to advance science and facilitate the transfer of technology, by allowing researchers to use a patented invention for research (research exception);

to speed up the process of marketing a generic drug. Some countries allow manufacturers of generic drugs to use the patented invention to obtain marketing approval without the patent owner's permission and before the patent protection expires. The generic producers can then market their versions as soon as the patent expires, since the (generally very lengthy) procedure involved in obtaining marketing authorisation has already been completed. This provision is called the "Bolar provision".

Flexibility in the application of patent law: compulsory licensing and parallel imports

In addition to the two exceptions to patent law mentioned above (Bolar provision and research exceptions), the TRIPS agreement make provision for two other forms of flexibility: compulsory licensing and parallel imports. These two systems should make it possible to strike a balance between promoting access to existing drugs and promoting research and development into new drugs.

Compulsory licensing

Governments can issue compulsory licences when they allow someone else to produce the patented product or use the patented process without the consent of the patent owner. The granting of compulsory licences without the authorisation of the patent owner can only be done under certain conditions aimed at protecting the legitimate interests of the patent holder. In particular, the party applying for a licence must have first attempted, unsuccessfully, to obtain a voluntary licence from the right holder on reasonable commercial terms and within a reasonable period of time. In addition, these compulsory licences should be granted mainly to supply the domestic market.

There is, however, no need to apply for a voluntary licence in advance in the following cases:

national emergencies;

other circumstances of extreme urgency;

public non-commercial use;

anti-competitive practices.

Parallel imports

The term parallel imports is used when products manufactured and marketed by the patent holder in one country are imported by another company. The legal principle here is "exhaustion", the idea that once a pharmaceutical company has sold its product its patent rights are exhausted and it no longer has any rights over what happens to the product. This therefore allows any other company to buy the product in a country where the selling price is lower and import it in order to profit financially from the difference in prices. The TRIPS agreement points out that disputes relating to these parallel imports cannot be handled by the WTO. This means in effect, as stated in the Doha Declaration, that each member of the WTO remains free to establish its own regime for exhaustion.

IMPLMENTATION OF THE AGREEMENT

Enforcement of intellectual property rights

The laws of the member countries of the WTO must include procedures to ensure that intellectual property rights are respected both by foreign right holders and by their own nationals. These procedures must permit effective action against any act of infringement of these rights. They must be fair and equitable, they must not be unnecessarily complicated or costly, and they must not entail unreasonable time limits. Final administrative decisions may be reviewed by a judicial authority.

With regard to the application of the Agreement, developed countries have a period of one year to bring their legislation and practices into line with the Agreement. This period is extended to five years (i.e. to 2000) for developing countries and countries in the process of transformation from a centrally-planned economy to a market economy, and to eleven years (i.e. to 2006) for the least-developed countries (LDC), with the possibility for the latter to obtain an extension. On 29 November 2005, the Council for TRIPS decided to extend the transitional period for LDCs until 1 July 2013.

In the case of pharmaceutical products, developing countries that did not provide product patent protection on 1 January 1995 (when the TRIPS Agreement came into force) have up to 10 years to introduce this protection. In the meantime they have to comply with two obligations:

they must allow inventors to file patent applications from 1 January 1995, even though the decision on whether or not to grant any patent itself need not be taken until the end of this transition period (the "mailbox" provision);

if the government allows a pharmaceutical product to be marketed during the transition period, the country in question must grant the patent applicant an exclusive marketing right for the product for five years.

Institutional framework

The Agreement created a Council for Trade-Related Aspects of Intellectual Property Rights (the Council for TRIPS). It is responsible for monitoring the operation of the Agreement, ensuring that members comply with their obligations and affording opportunities for consultations between members.

The settlement of disputes over intellectual property is governed by the dispute settlement procedures adopted following the Uruguay Round negotiations.

Regulation (EC) No 816/2006of the European Parliament and of the Council of 17 May 2006 on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems

The purpose of this Regulation is to harmonise within the European Union (EU) the conditions for granting compulsory export licences to companies intending to manufacture generic medicinal products for export to developing countries which do not have sufficient production capacity of their own. The Regulation aims to prevent distortion of competition among operators in the single market and to apply uniform rules in order to avoid the reimport into the EU of pharmaceutical products manufactured under the compulsory licences.

Ministerial Declaration on the TRIPS agreement and public health adopted on 14 November 2001 (Doha Declaration)
This Declaration on the TRIPS agreement and public health seeks to address the concerns expressed by developing countries regarding the possible implications of the TRIPS agreement on access to medicines.

The Declaration interprets some of the key provisions of the TRIPS agreement. The Ministers reaffirm the right of the member countries to use the flexibilities that are built into the TRIPS Agreement, in particular compulsory licensing and parallel importing.

The WTO members also agreed to extend exemptions on pharmaceutical patent protection for least-developed countries at least until 2016.

Finally, the ministers assigned the TRIPS Council the additional task of sorting out how to provide extra flexibility, so that countries unable to produce pharmaceuticals domestically can import patented drugs made under compulsory licensing.

Decision adopted by the WTO General Council on 30 August 2003

The decision adopted by the WTO General Council on 30 August 2003 allows countries that can make drugs to export drugs made under compulsory licence to countries that cannot manufacture them. This authorisation constitutes a derogation from the TRIPS agreement since products made under compulsory license must normally be predominantly for the domestic market. This will therefore make it easier for poorer countries to import cheaper generics made under compulsory licensing if they are unable to manufacture these themselves. For a long time, the stumbling block for negotiations within the WTO was determining which diseases were covered by the decision. In the end, the decision refers to the Doha Declaration that covers "the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics." It is now widely accepted that this coverage is fairly flexible.

The August 2003 decision also introduces safeguards in order to prevent rich countries profiting from the system by diverting trade through smuggling. A statement accompanies the decision from the Chairperson of the WTO General Council that is intended to reassure countries who feared that the decision might be abused. It points out that the system of derogations introduced will be used "in good faith to protect public health and not as an instrument to pursue industrial or commercial policy objectives".

Finally, the decision of August 2003 lays down that the decisions taken in it should be put into practice by an amendment to the TRIPS agreement by mid-2004. On 6 December 2005, the WTO General Council adopted the decision, changing the provisional agreement of August 2003 into an amendment to the TRIPS agreement. WTO members have until 1 December 2007 to accept the amendment.